Former High Court Judge Kenneth Hayne will lead the royal commission into the banking, superannuation and financial services industry.

Former High Court Judge Kenneth Hayne will lead the royal commission into the banking, superannuation and financial services industry, the government has announced.

Mr Hayne sat on the High Court bench from 1997 until 2015. In announcing his appointment, Prime Minister Malcolm Turnbull described him as being "renowned for his brilliant mind, his forensic skill, and his deep sense of justice".

"Mr Hayne's wealth of experience at the highest levels of Australia's judiciary makes him the ideal person to conduct this Royal Commission," the Prime MInster said.

It has been established to consider the conduct of banks, insurers, financial services providers and superannuation funds but not self-managed superannuation funds.

When Mr Hayne retired from the High Court in 2015, he was replaced by his wife, Michelle Gordon, who, as a Federal Court Judge, ruled ANZ Bank late payment fees were illegal. She called them "extravagant, exorbitant and unconscionable". This was overturned by an appeal to the full bench of Federal Court.

During his High Court tenure, Mr Hayne presided over the the challenge to the Western Australian Senate vote in 2013 after the Australian Electoral Commission lost several hundred ballot papers. He declared the results void and ordered a new Senate election, which caused enormous inconvenience to the Abbott government. It was forced to put on hold the release of its commission of audit, many measures from which were adopted in the notorious 2014 budget. The government later blamed the backlash towards the budget on the fact it could not release the audit earlier and start making the case for the harsh cuts it recommended.

The royal commission will take 12 months with a final report scheduled by February 1, 2019.

Mr Turnbull said: " All Australians have the right to be treated honestly and fairly in their dealings with the financial services industry".

An inclusion in the terms of reference for a examination of union-dominated industry funds, as direct payback to Labor for forcing the government's hand, has outraged the labour movement.

Shadow treasurer Chris Bowen called the inclusion juvenile while David Whitley of Industry Super Australia said "the idea that industry superannuation funds were somehow responsible for the collapse of confidence in the financial sector is absurd."